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NIOC Underscores Iran’s Rights in Oil, Gas Contracts

NIOC Underscores Iran’s Rights in Oil, Gas ContractsNIOC Underscores Iran’s Rights in Oil, Gas Contracts

Foreign companies operating in Iran's oil and gas projects will hold no rights of ownership or authority over the country's hydrocarbon reserves or any production facility, the state-run National Iranian Oil Company said in a statement released late on Monday.

The statement is an effort to ease some of the concerns over the new model of oil contracts, officially known as Iran Petroleum Contracts, which has been criticized by some opponents of President Hassan Rouhani's government.

"In the new model of oil contracts, contractors hold no rights over reservoirs, facilities or even production, and NIOC is allowed to pay the contractors in cash or in the form of product," the statement was cited by Shana.

According to reports, contractors must be remunerated from the output or the profit generated from the same fields they develop.

"Production from (oil and gas) fields will be carried out under the direct supervision, control and approval of the National Iranian Oil Company and the contractor is only an operational agent," the statement said, stressing that the relationship between NIOC and international companies is also defined in the contracts.

Critics of IPC, which contract took shape after Rouhani took office in mid-2013, say the new contracts would allow foreigners cheap access to Iran's massive hydrocarbon resources under long-term contracts. Some have also gone so far as to brand the IPC a "concession" of hydrocarbon resources.

The government has been working on the new contractual model as a replacement for buyback contracts that have been in place in Iran's energy sector for over two decades. It says that buyback terms were not attractive enough even before the tightening of international restrictions over Iran's economy.

  Rollercoaster Ride

However, IPC has been on a rollercoaster ride after it was first unveiled in an international conference in Tehran last year.

Tenders for Iran's first oil and gas contracts under the IPC framework were expected to be held in a February conference in London.

The plan was put on hold following the growing resistance of inside groups against IPC that has manifested itself in different ways, ranging from rallies outside the Oil Ministry building to collecting signatures in parliament for a bill to limit the government's say in drafting the terms of the contracts.

But the first oil and gas deals under the IPC look well within sight. IPC was officially approved last month in a Cabinet meeting as well as by the Resistance Economy Headquarters, a top government economic advisory body, after some amendments.

In a reassuring statement last week, Amirhossein Zamaninia, deputy oil minister for international affairs, said some oil projects "will certainly be offered to international companies in two months" and multibillion-dollar deals will be signed in the current Iranian year that ends on March 20, 2017.

Financialtribune.com